Shanghai, in a bid to attract and reassure foreign investors, is looking to simplify the process of mobile payments and ATM withdrawals for expatriates who are in the city for short durations.
Central Bank’s Proposed Solutions
The People’s Bank of China’s Shanghai branch has put forth proposals to streamline the process. This would include enabling foreigners to use their credit cards for making purchases and withdrawing the local currency, renminbi, from ATMs spread across the city. These developments were reported by state media outlet, The Paper.
Concerns of Multinational Corporations
On September 15, executives from leading multinational corporations like Deloitte and HSBC had a discussion with Shanghai’s market administration officials and representatives from the PBOC. The aim was to address concerns and brainstorm solutions. A prominent suggestion that emerged was the re-establishment of point-of-sale terminal transactions in major retail outlets to facilitate smoother transactions using foreign credit cards.
Shanghai’s Pursuit of Foreign Investment
Shanghai’s engagement with international companies and the promises made during these sessions signify the city’s effort to assure stakeholders, given its dependency on foreign investment. From January to July, China’s foreign direct investment saw a dip of 9.8% year on year, standing at US$111.8 billion, as stated by China’s commerce ministry.
A number of factors have impacted investor sentiment. These include restrictions on cross-border data flow, the introduction of a new anti-espionage law, and a series of unexpected police raids on US consultancies. Additionally, a report from the European Union Chamber of Commerce in China highlighted that around 10% of EU companies either relocated their Asian headquarters from mainland China in the past five years or have plans for the same.
A survey conducted by the American Chamber of Commerce in Shanghai further emphasized the concerns. It showcased that the confidence level of US firms regarding China’s prospects for the next five years is at its lowest in over two decades.
Shanghai’s eagerness to restore confidence stems from its reliance on foreign investment, which plays a crucial role in its economy. Last year’s statistics from the Shanghai government highlighted that foreign-invested firms in Shanghai contributed significantly to its revenues, industrial output, and GDP.
Lu Aiguo, who heads the business environment construction division of Shanghai’s Municipal Development and Reform Commission, stated, “Shanghai has earmarked 195 tasks to foster a favorable business environment. Out of these, 51 are set for completion in October.”
Promises of Leniency in Law Enforcement
In addition to improving the business environment, Shanghai has also committed to being more lenient in its law enforcement, particularly towards foreign companies. The idea is to exempt foreign businesses from penalties for minor infractions. Reports from local media cited statements from the city’s Market Supervision Administration which highlighted that 31 lists spanning 26 sectors have been in place since 2019. These lists essentially exempt companies from penalties in relevant scenarios.
The September meeting also brought to light details from officials overseeing Shanghai’s Lingang Free-Trade Zone. They unveiled plans for “five scenarios” that would involve incremental supervision of cross-border data transfers categorized as low to medium risk.
Adding to this, China’s cyberspace regulatory body released a draft guide the previous month, focusing on cross-border data transfers. This guide sought public feedback. Free-Trade Zones (FTZs) would be given the authority to design their “negative lists”. Any data not falling under these lists would be permitted to be transferred internationally without any hindrances.
Feedback from Foreign Companies
The discussion also saw foreign companies raising other concerns and providing feedback. This encompassed the need for equitable market access, especially for sectors like finance and pharmaceuticals. They also expressed the need for flexibility in the implementation of financial market regulations, like placing a cap on the earnings of top executives. Furthermore, companies emphasized the need for tailored strategies specifically designed for small- and medium-sized businesses, as reported by The Paper.
In summary, Shanghai’s move to streamline mobile payments and ATM accessibility for short-term expats represents its larger effort to retain and attract foreign investment. By engaging with multinational giants, addressing their concerns, and committing to business-friendly reforms, the city hopes to position itself as a favorable destination for international businesses.